5.3.2.1.1. Project-specific versus generic

Most projects developed under the AIJ Pilot Phase have used project-specific,
bottom-up baselines determined by project developers (Moura-Costa et al.,
2000; see also Table 5-4). The attractions of
this approach are that analysis focuses on specific areas and activities relating
to the project and that developers may have a better knowledge of local conditions.
Because land-use practices and change processes are often spatially and temporally
variable, a detailed project-specific study arguably is likely to yield a more
accurate prediction of emissions than a broader regional or sectoral assessment.
Giving project developers the task of developing baselines also introduces the
risk, however, that they may choose scenarios that maximize their perceived
benefits (Tipper and de Jong, 1998). Moreover, ensuring consistency between
assessments may be difficult if different teams develop many baselines. Allowing
ad hoc project baselines could lead to inconsistent approaches among
similar projects and increase the risk that project baselines would be set strategically
to maximize the potential to generate credits.

Generic methods that have been proposed but not yet tested include benchmarking
models similar to those being assessed for the industrial and energy sectors
(Center for Clean Air Policy, 1998; Hargrave et al., 1998; Baumert, 1999;
Ellis and Bosi, 1999; Friedman, 1999; Jepma, 1999; Michaelowa, 1999). For example,
certain practices could be considered "standard management practice," and baselines
might be set to reflect the level of carbon sequestration or emissions avoidance
that would occur if these practices were universally applied. Credit would then
be available only to the extent that a project improved on the results that
would be obtained by simply applying these standard practices. Because the development
of credible baseline scenarios represents a significant capital cost, the use
of generic baselines for sectors, technologies, or regions could provide economies
of scale (Baumert, 1999). If such baselines were set by an organization independent
from project developers, they could also provide transparency and reduce the
potential for discrepancies between projects. The applicability of this approach
to the LULUCF sector is unclear; no project to date has used a benchmarking
approach. Generic baselines set by a coordinating body have been used in a few
cases (e.g., the Protected Areas Project in Costa Rica, SGS, 1998; the Profafor
project in Ecuador, FACE Foundation, 1998).

Another proposed approach involves minimum performance benchmarks (Brown, 1998).
Minimum baselines or benchmarks could help to avoid rewarding countries or investors
with poor practices or policies by paying for improvements over an exceedingly
low baseline (Brown, 1998). If countries hosting LULUCF projects have policies
that encourage carbon-emitting activities, such as subsidies for deforestation,
LULUCF projects may only be mitigating the impact of poor policies. For instance,
if project baselines are influenced by the threat that a particular area will
be deforested in the absence of the project, this situation could create an
incentive to "demonstrate" the threat of deforestation-by building roads through
isolated areas, for example.